AMD reveals little about turnaround plans

'Our plans are bold,' Ruiz says in talk that is short on specifics

Jordan Robertson, Associated Press

Published 4:00 am, Friday, May 9, 2008

Grappling with major layoffs and a stock price that's been chopped nearly in half since last year, Advanced Micro Devices Inc. kept new details about its turnaround plans close to the vest Thursday in a very brief annual meeting with shareholders.

The Sunnyvale company's chief executive, Hector Ruiz, notably did not discuss AMD's long-awaited plans to cut its heavy manufacturing costs. His 20-minute speech was punctuated with just one question from a shareholder - about why AMD doesn't sponsor professional golf tournaments to increase its visibility.

AMD is the world's No. 2 maker of microprocessors, the brains of personal computers, and it and much larger rival Intel Corp. spend billions of dollars each year refining their manufacturing processes, which make up a large part of both companies' expenses and intellectual property.

AMD accounted for 20.6 percent of the PC processor market in the first quarter, scarcely one-fourth of Intel's 78.5 percent share, according to Mercury Research Inc.

A year ago Ruiz began hinting that AMD is thinking about offloading some of its manufacturing duties to third parties to save money, but he has been tightlipped about details.

"Our plans are bold, and progress is ongoing," Ruiz said Thursday in prepared remarks about what's being called the "asset smart" manufacturing strategy. "And I hope to communicate additional details of this complex undertaking in the very near future."

AMD has racked up more than $4 billion in losses over the last year and a half as intensifying competition from Intel and expenses from AMD's $5.6 billion acquisition of graphics chipmaker ATI Technologies have taken their toll.

The company said last month it plans to jettison 10 percent of its global workforce, or about 1,600 workers, by September in an aggressive cost-cutting move.

Ruiz reiterated Thursday that the company expects to reach operational profitability in the second half of this year.

His comments came a day after the company outlined its server strategy for the next several years, which includes plans for chips with six and 12 cores, or calculating engines. Most chips now have two or four cores. Adding more cores increases the chips' ability to handle many tasks at once and is something chipmakers have to do to continue boosting performance while keeping a lid on power consumption.

Intel is also working on future chips with more than four cores.

AMD, whose shares are down about 8 percent this year, rose 3 cents to close at $6.93 on the New York Stock Exchange, while Santa Clara's Intel climbed 23 cents to finish at $23.40 on the Nasdaq Stock Market.